Welcome, to May's Tax Tips & News, our newsletter designed to bring
you tax tips and news to keep you one step ahead of the taxman.
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May 2016
· The importance of cyber-security
· HMRC on house due diligence
· New student loan plans take effect
· Companies to be liable for employees who facilitate tax cheating
· May Questions and Answers
The
importance of cyber-security
The days of criminals needing brute
force and threatening behaviour have been replaced by the ones sat at home on
their computers seemingly doing their best to damage your life, or more
worryingly, your business. According to The Independent IT Security Institute
(AV-TEST) there are almost 400,000 new malicious programs registered every day
(https://www.av-test.org/en/statistics/malware/).
Many business owners may be tempted to use free Antivirus, or products designed
for home users because they are often cheaper and more easily accessible. However
a cost-effective professional solution to consider is Gravityzone by leading
software provider Bitdefender, which has been designed for business users.
The
benefits of using business level security over free/home user versions include:
-
Your computer is connected to over 500
million other devices via Bitdefender’s Global Protection Network (GPN) which performs
over 11 billion queries and checks per day.
-
Bitdefender’s GravityZone anticipates
and takes action to neutralize the latest dangers in as little as 3 seconds.
This Zero Day threat detection is important when it comes to protecting your
computer from new threats.
-
It can also be configured to block
specific website content from being accessed on your computer, such as gambling
websites.
-
The business endpoint is a lightweight
installation compared to home user versions which has a lower impact on your
computer.
-
The endpoint is specifically designed
to perform more of its work when you’re not using your computer at a high
capacity.
For more information you can contact
local antivirus experts Proteus Support Ltd at: http://www.proteus-support.ltd.uk.
HMRC on house due diligence
Further to the Budget 2016 announcement, HMRC have published a
consultation document covering proposals to introduce a fulfilment house due
diligence scheme whereby fulfilment houses in the UK will be required to
register, maintain accurate records and be able to evidence the due diligence
they have undertaken to ensure their overseas client is a bona fide supplier.
The scheme may directly affect all UK-based businesses that fulfil
orders of imported goods. Some rules may also apply to businesses that import
goods or those that transport imported goods to and from fulfilment houses.
The consultation will run until 30 June 2016. The intention is to
introduce this measure in 2018.
New student loan plans take
effect
Repayment of student loans is a shared responsibility between the
Student Loans Company (SLC) and HMRC. Employers have an obligation to deduct
student loan repayments in certain circumstances and to account for such
payments ‘in like manner as income tax payable under the Taxes Acts’ (Education
(Student Loans) (Repayment) Regulations 2000, SI 2000/944, reg 14).
With effect from 2016/2017 there are two plan types for student loan
repayments:
- plan 1 with a 2016/2017 threshold of £17,495 (£1,457 a month or £336
per week);
- plan 2 with a 2016/2017 threshold of £21,000 (£1,750 a month or £403
per week).
Plan 1 loans are pre-September 2012 Income Contingent Student Loans.
Loans taken out post-September 2012 in England and Wales have the higher
threshold of £21,000. Previously these have been repaid outside of the payroll
directly to the SLC. From April 2016, they will be calculated and repaid via
deduction from the payroll. So, from April 2106, employers and payroll software
will have to cope with both types of plans.
Broadly, employers are responsible for:
- checking if a new employee needs to make student loan repayments;
- deducting student loan repayments and passing the payment to HMRC;
and
- recording student loan repayments on employee payroll records, pay
slips, Full Payment Submissions (FPS) and on a form P45 when an employee
leaves.
Employers are not responsible for deciding that employees have to make
student loan repayments or handling employees’ student loan queries.
Student loan deductions are made from gross pay, alongside tax and NIC.
Deductions are rounded down to the nearest pound. Deductions are
non-cumulative, and so employers can ignore the question of amounts already
deducted. HMRC provide tables, and the employer CD-ROM can be used to calculate
the deduction which (because of rounding) may not be exactly 1/52 of the annual
amount.
If an employee has two jobs, the employer does not need to be concerned
with the employee’s other income, but should calculate the deduction based only
on amounts paid by him. However, if the employee has two employments with the
same employer, these should be aggregated for student loan purposes if they are
aggregated for NIC purposes.
Employers are required to collect student loan repayments through the
PAYE system by making deductions of 9% from an employee’s pay to the extent
that earnings exceed the relevant threshold (see above).
Each pay day is looked at separately, and so repayments may vary
according to how much the employee has been paid in that week or month. If income
falls below the starting limit for that week/month, the employer should not
make a deduction.
Example
James leaves university in June 2016, and starts a new job in August
2016 earning £2,000 a month (£24,000 a year).
His student loan repayments will commence in April 2017 and will be
calculated as follows:
Income in April 2017: £2,000 – £1,750 (starting limit) = £250
£250 × 9% = £22.50 repaid in April 2017.
Companies to be liable for
employees who facilitate tax cheating
The Government has recently announced that it is to bring forward plans
to introduce a criminal offence for corporations who fail to stop their staff
facilitating tax evasion.
At the time of the March 2015 Budget, the Chancellor confirmed that the
government would be delivering on its pledge to introduce the measure in this
Parliament. Prime Minister David Cameron has now confirmed that the offence
will be introduced in legislation brought forward this year.
The government has already confirmed plans to create a cross-agency
taskforce to investigate all evidence of illegality that has emerged from the
so-called ‘Panama Papers’.
Further information on this announcement can be found here.
May Questions and Answers
Q1. How do I work out my share of a capital gain?
I owned a quarter share in a property that was sold in 2015. It was not
my main residence at any time during my period of ownership. I am trying to
work out my share of the capital gain arising on the property. Do I simply
divide the purchase price, sale price, and any improvement costs by four to
work out how much tax I will have to pay?
A: Assuming that all the improvement costs and the sale proceeds
relating to this property were 25% your responsibility, then yes, you just show
the figures relating to your share of the gain on your tax return. However, it
may be worth providing HMRC with clarification in the ‘additional information’
section of the return.
Q2. Are my savings covered by the personal savings allowance?
I have several savings accounts. Most of the accounts have always had
tax deducted from the interest paid before I receive it. However, I understand
that one of my accounts is ‘tax-free’. Interest has always been paid gross and
I have never included it on my tax return. I am a basic rate taxpayer. Is the
‘tax-free’ account interest included in the personal savings allowance limit?
A: From 6 April 2016, banks and building societies will pay interest on
all savings accounts gross. In parallel with this change, the new personal
savings allowance (PSA), also introduced from 6 April 2016, means every
basic-rate taxpayer can earn £1,000 interest without paying tax on it (higher
rate taxpayers have a PSA of £500), currently equivalent to the interest on
almost £75,000 in some easy-access savings account.
Interest that is already tax-free isn't included – so this includes ISA
interest and Premium Bond 'winnings'. Interest from these will still be paid
tax-free, but it just won't count toward your PSA limit. So, if you get £500 in
ISA interest, and you're a basic-rate taxpayer, you'll still have £1,000 of PSA
to cover other interest.
Q3. Will I be entitled to tax-free childcare?
I have heard that HMRC are launching a new tax-free childcare scheme. I
am currently employed and earn £70,000 a year. My employer does not provide any
support for childcare. Will I be eligible to join the new scheme?
A: HMRC have confirmed that a new tax-free childcare scheme will be
launched from early 2017. To qualify, parents will have to be in work, and each
earning around £115 a week and not more than £100,000 each per year.
Tax-Free Childcare does not rely on employers offering the scheme,
unlike the current scheme (‘employer-supported childcare’). Any working family
will be able to use the new scheme, provided they meet the eligibility
requirements.
Once launched, you will be able to open an online account, which you
can pay into to cover the cost of childcare with a registered provider. This
will be done through the government website, GOV.UK.
For every 80p you or someone else pays in, the government will top up
an extra 20p. This is the equivalent to the current basic rate of income tax –
hence the ‘tax-free childcare’ name given to the new scheme. The government
will top up the account with 20% of childcare costs up to a total of £10,000 -
the equivalent of up to £2,000 support per child per year (or £4,000 for
disabled children). The scheme will be available for children up to the age of
12.
May Key Tax Dates
2 - Last day for car change notifications in the quarter to 5 April -
Use P46 Car
19/22 - PAYE/NIC, student loan and CIS deductions due for month to
5/5/2016
31 - Deadline for copies of P60 to be issued to employees for 2015/16
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